iAnthus Revenue Continues Downward Slide in Q2

The company responded to recent federal racketeering allegations in filings.

Late Monday evening after the markets closed, iAnthus Capital Holdings Inc. (CSE: IAN) (OTCPK: ITHUF) reported its second quarter financial results ending June 30, showing deepened losses as the Canadian producer tries to crawl out of sweeping legal and financial crises.

The company posted a revenue of $38.7 million, a 5.2% sequential rise but an 11% drop versus the same period in 2022.

The company’s gross profit was reported at $18.4 million, an 18.7% uptick from the previous quarter, but a 6.5% slump from last year. The numbers paint a picture of a company’s gross margin that has grown by 529 basis points sequentially, settling at 47.5% along with a year-over-year 227 basis points.

Net losses for iAnthus deepened, registering at $20.1 million, slightly higher than the $18.6 million in the first quarter. It was still an improvement from the staggering net loss of $373.6 million in the same quarter of 2022.

The company also reported negative adjusted EBITDA of $400,000, down from a positive adjusted EBITDA of $900,000 in the first quarter and $2.3 million the year prior.

Market Updates

According to filings, the company on May 8 agreed to sell almost all assets of its subsidiary, iA CBD, LLC, which operates the CBD for Life product line, to C4L LLC for $200,000 in cash. The transition included an interim management agreement allowing C4L to assume control of the business operations.

On July 1 in Maryland, the company started adult-use operations through its subsidiaries. IAnthus also began adult-use sales in Gloucester Township , New Jersey, on June 15.

However, in Nevada, the company’s subsidiary, GreenMart of Nevada NLV LLC, entered an agreement on August 8 to sell most of its assets for $4 million to several entities including Phoenix Group Reno LLC, and Hash House Brands LLC.

The company’s eastern region operations reported sales revenue of $24.8 million, down slightly from the $25.8 million for the same period last year. The company attributed the 3.6% downtick to rising competition and pricing pressures in medical-only Florida. Conversely, there was growth in areas such as New Jersey, which recently launched its adult-use program.

The western region experienced a more significant decline, with sales revenue falling to $13.8 million, a 20.6% decrease from the $17.4 million in the same period last year. The fall is due to lower wholesale revenues in both states, the company stated.

iAnthus’s total operating expenses during the reported period were considerably lower than the previous year, amounting to $28.5 million compared to 2022’s $65.1 million.

Legal Troubles?

Newly minted CEO Richard Proud did not comment on the results, but the company did respond to several lawsuits lodged against it, including federal racketeering allegations.

“(iAnthus) denies LMS’s allegations alleging unlawful conduct and intends to vigorously defend the Federal Complaint in due course,” the company stated in filings Tuesday.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.

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